IRS Probes IRA Abuses

A top Treasury official, responding to a letter from Rep. George Miller (D., Calif.), said the Internal Revenue Service is focusing on the valuation of assets contributed to individual retirement accounts. Mark Mazur, the recently confirmed assistant secretary for tax policy, said in a Sept. 19 letter that the IRS has “pursued these issues diligently” recently.

At issue is whether nontraded assets in IRAs and Roth IRAs were properly valued at the time they were put in the accounts. It surfaced publicly after a Wall Street Journal article last January noted that Mitt Romney’s reported IRA is between $21 million and $102 million, far larger than the norm, perhaps because of contributions of nontraded assets to a retirement plan that was rolled over into an IRA.

The tax law allows such contributions and rollovers, but Mazur’s letter noted that non-publicly traded IRA assets must be valued “using a fair market standard (as opposed to liquidation or other value).”

The letter added that the IRS now has a working group focused on this and other issues and is also determining how many audits involving IRA valuation issues are underway.